Saturday , February 29 2020

Universal Credit payments are due to rise but will everyone benefit? | Personal Finance | Finance

Universal Credit benefits have remained at the same level since 2015 as part of the “Government’s drive to incentivise work and reduce the deficit”. However, the Government is now taking steps to end the freeze. As Secretary of State for Work and Pensions Thérèse Coffey detailed: “We’re clear the best way for people to improve their lives is through work but we know some people require additional support.

In April the full rate of the UK’s new state pension will increase by £175.20 per week, resulting in an extra £344 a year.

The government’s triple lock guarantees that people getting the basic and new state pensions will receive at least a 2.5 percent rise in their pension or, if higher, the average rise in earnings or prices.

This year’s increase is tied to wage growth and, as a result of this, will see the basic state pension rise by £1,900 more in cash terms compared to 2010. The full weekly rate of the basic state pension will increase by £5.05 per week, from £129.20 to £134.25 per week.

The weekly full rate of the new state pension will increase by £6.60 per week, from £168.60 to £175.20 per week.


However, under transitional arrangements for the state pension, not everyone will get this amount.

The new state pension takes National Insurance records into account, as such some people will receive more and others less.

Many will likely welcome the rise in benefits, but the negative impact of the benefits freeze may continue to affect lower income families.

Analysis by the Resolution Foundation found that the social security safety net for working age families is still eroding relative to earnings and pensions.

The long-term delinking of working-age benefits to earnings means, for example, that unemployment support has fallen to a record low of 14 percent of average earnings, down from 27 percent at the emergence of the Beveridge system, the original model that formed the basis for the welfare state.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, detailed in October: “Today’s inflation figures have confirmed that working-age benefits received by millions of families are set to rise in line with prices by 1.7 percent next April. This is their first cash increase in five years.

“While the benefit freeze is over, its impact is here to stay with a lower income couple with kids £580 a year worse off as a result.

“Because benefits will only keep pace with rising prices, the social security safety net will continue to erode – falling further behind earnings and the state pension.

“With children born today facing the highest risk of poverty in 60 years, it’s time the main parties rethought their approach to welfare, and reprioritised their efforts towards supporting low and middle income families.”

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